DeepSeek fears subside, US power companies spend more on data centers
U.S. Electric utilities are increasing their spending plans by tens and even hundreds of millions of dollars in order to upgrade the grid and build new power sources as artificial intelligence data centers and cloud computing drives up energy consumption.
PPL Corp announced on its earnings call that it will increase capital investment by almost 40%, to $20 billion. Dominion which is the largest provider of data centers in Northern Virginia and Exelon, the utility giant, both revised their capital plans in the past week.
These investments will be used for a wider range of utility customers.
The upward revisions of capital investments are a sign of a rapid increase in data center power consumption. They also refute concerns that the Chinese AI startup DeepSeek's market gains, which depressed the share prices of power companies at the beginning of the year would reduce Big Tech's energy demand. Bill Fehrman is the CEO of American Electric Power in Ohio. The company plans to add $10 billion to their $54 billion capital spending plan by the end of this decade.
Fehrman stated that data center clients told AEP they would continue to pursue electricity supplies after the previously unknown DeepSeek attracted national attention in late November.
Exelon and Duke executives said their customers in the technology industry assured them that they would not slow down on building giant computer warehouses.
Brian Savoy, Duke CFO, said that he had not noticed any change in the tone of voice.
According to the Energy Information Administration, U.S. electric demand will reach new records this year and by 2026.
The rise in data centers is not the only factor driving power consumption. Manufacturing and electrification, such as transportation, are also factors.
However, the country's data centres are being constructed at a very large scale. The data centers that were typically 20 megawatts in capacity are now up to 1,000 megawatts or 1 gigawatt on a single location. This is enough power to run all the homes in one of the largest U.S. cities.
PPL has nine gigawatts at advanced stages of development, and AEP has 20 gigawatts committed to customers primarily in the data center sector through 2030.
Many utilities must have their plans approved before they can spend money.
The rising cost of electricity for homes and businesses is also a result of capital projects that include new transmission lines and electricity generation. However, it's not clear whether certain companies will make special provisions that require data centers to pay more for grid costs.
AEP and Exelon, among others, are involved in a regulatory battle over the development of power contracts for data centers and large customers. Reporting by Laila K. Kearney, Seher Dareen, and Vallari Srivastava, in New York; editing by Maju Samuel and Nia Williams, and David Gregorio
(source: Reuters)
